Government hints at possibility of equal pay lifeline for local councils

The government has refused to rule out legislating to solve the equal pay crisis that could cost councils up to £5bn in settlements.

Local authorities across the UK are struggling to fund equal pay deals arising from the single-status agreement, which demands equal pay for all work of equal value. The most significant liabilities are in the West Midlands (£928m), Yorkshire & Humber (£371m) and theNorth West (£740m).

The government had previously insisted it would not fund the equal pay bills, but has now raised the prospect of providing legal help for local authorities.

The Local Government Employers body warned that some councils could be forced to declare themselves bankrupt or slash services unless they received some assistance.

Local Government Employers wants the law to be changed to allow for a moratorium on claims for a transitional period. During this period, any agreements reached between employers and unions would be allowed to take effect without facing legal challenges.

Local government minister Phil Woolas said the equal pay crisis was “the single most important issue in my in-tray”, and he was “reviewing urgently” legal opinion on the proposal. “The government does not rule out legislation to protect the ability of employers and representatives to reach agreements if that is desirable,” he said.

Woolas reiterated that no extra cash would be made available to councils. “It is for individual authorities as employers to ensure that pay bill pressures arising from workforce changes are carefully managed,” he said.

The timetable for potential legislation will be dictated by the outcome of the Allan v GMB tribunal appeal, held last week. The decision could jeopardise the ability of employers and unions to reach collective agreements.